11/9/2017 Top Employee Provident Fund Questions Answered

Top Employee Provident

Fund Questions
Answered
Simple Interest | General/ Income Tax/ Investment | Sep 9, 2015 | 50
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Are you a salaried person!! if yes, than you must be holding an Employee Provident
Fund (EPF) Account with the EPFO. It is mandatory to own a EPF account if you are in job and
draws a salary of up to Rs.15,000 per month. EPF is optional for individuals drawing salary more
than Rs.15,000 per month.

The EPF is maintained solely by the Employees Provident Fund Organization of India (EPFO) and
any organization employing more than 20 persons is necessarily required to get registered with the
EPFO.

FAQs on Employee Provident

Fund
Q. Is Contribution to Employee
Provident Fund Mandatory?
Yes, contributing to EPF is mandatory for the employees who have a basic salary plus dearness
allowance is up to Rs.15,000 (earlier it was Rs.6,500). And those who are earning above Rs.15,000
may contribute voluntarily.

But the decision to opt out of scheme should be taken at the start of your career. In case, you have
been a member of EPFO once, then you are not allowed to opt out of the scheme.

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Further, opting out of the scheme will increase your in hand salary and thus your tax outgo will also
increase, so it is strongly recommended to avail this scheme as this is the easiest way to build a
huge corpus for retirement.

Q. What are the Tax-Benefits of EPF

contribution?
Another benefit of this robust scheme is that the contribution made towards EPF is an eligible
deduction under section 80C. The maximum deductible contribution is ceiling the limit of section
80C i.e. Rs.1.50 lakh for current financial year 2015-16.

Q. What is the Break-up of EPF

Contribution?
As per EPF Act, 1952, the monthly contribution of employee and employer would be divided in the
following way:

So if your basic salary plus dearness allowance is Rs.15,000 than the contribution would be
proportioned in the following way:

Employee Employer
Scheme
Contribution Contribution

Employee Rs.1,800 Rs.550.5

Provident

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Fund

Employees

Pension 0 Rs.1,249.5
Scheme

Employee
Deposit
0 Rs.75
Linked
Insurance

Q. What is the current interest rate

on EPF?
The current rate of interest is 8.75% p.a. The interest is compounded yearly.

The point to note in the interest calculation is done only on the part of EPF not on EPS. So if your
contribution towards EPS is Rs.1,800 (12%) and your employer contribution towards EPF is Rs.550
(3.67%) and Rs. 1250 (8.67%) towards EPS, than the interest of 8.75% would be calculated on the
amount of Rs.2,350.

Q. Which one is better EPF Vs.

PPF?
Employee Provident Fund is only for salaried person and Public Provident Fund is for self-
employed person. But salaried person can enjoy benefit of both EPF as well as PPF while self-
employed person can only take benefit of PPF.

Recommended Read: EPF vs. NPS

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S.No. Comparison EPF PPF

Parameter

Only
Who can Any Indian,
1 Salaried
Invest? except NRIs.
person.

Any Amount
Statutory is between
12% of basic Rs.500/- and
+DA. Rs.1,50,000/-

per year.

Can
voluntarily A maximum
Quantum and
increase the of 12
2 Frequency of
contribution. contributions
Investment
can be made

Frequency is per year

monthly subject to a

from the minimum of

salary itself. Rs.100 per

transaction.

Current

Returns (w.e.f
3 8.75% p.a. 8.70% p.a.
1st April,

2015)

4 Loan Options Partial Up to 50% of

Withdrawal. the balance of

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11/9/2017 Top Employee Provident Fund Questions Answered

the 4th from

the 6th year

onwards.

At the time

of

retirement
Intially15
or
years which
resignation,
can be
whichever is
extended
earlier.
indefinitely

by extending
Can transfer
for 5 years
Period of account to
each after
5
Investment new
that.
company till
retirement.
In case of

death amount
In case of
is paid to
death
legal heirs.
amount is

paid to legal

heirs.

6 Tax Contribution Contributed

Treatment at gets Section amount

the time of 80C benefit. comes under

investment as Section 80C

well as at the deduction.

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time of Maturity is Maximum

maturity also tax free Limit of Tax

if Benefit is the

contribution ceiling limit

is withdrawn of Section
after 80C.

completing 5

years of
Maturity is
continuous
also tax free.
service

including

transfers

from
different

companies.

Maximum

Limit of Tax
Benefit is the

ceiling limit
of Section

80C.

Unique aspect of PPF

The other unique feature of PPF is that in case of insolvency, the PPF account cannot be used to pay
off debts in settlement process. However the PPF account can be utilized in case of Income Tax
evasion.

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Q. How to Check my EPF Balance

Online?
There are two ways to check EPF balance online.

1. Register yourself at http://uanmembers.epfoservices.in/ and request for passbook. The passbook

will be made available after 48 hours of request. This passbook will provide EPF account balance
and contribution details made by you and your employer.

2. The second method to check EPF balance is via SMS. All you have to do is click on the link
below: http://www.epfindia.com/site_en/KYEPFB.php

Select you PF office state and then your Regional PF Office. Enter your alpha numeric PF account
number like RJ/UDR/123456/000/1234, your name and the mobile number on which you would
like to get the EPG Balance Message. As soon as you hit the submit button, you would get the
balance message on your mobile screen.

Q. How and when can I withdraw my

EPF account money?
You can withdraw your EFP money for various reasons but only by fulfilling certain conditions,
non-compliance of which would result in levying of penal interest.

Refer: Reasons and Condition to withdraw EPF Money

Apart from the above stated conditions, if a person is taking a VRS at the age of 54 and above, then
EPF money could be taken out only up to the 90% of the balance.

Q How Premature Withdrawal from

EPF account is taxed?

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Premature withdrawal means taking money out from the EPF account before 5 years of continuous
service. Please note that continuous service means continuous contribution for 5 years. If you left
the job after 3 years but made withdrawals after 5 years than also it would construed as premature
withdrawal and full withdrawn amount would be taxed.

Budget 2015 has levied 10% TDS on premature withdrawal if exceeds Rs.30,000.

Recommended Read: TDS on EPF Premature Withdrawals

Q. What is Illegal Withdrawal of EPF

Money?
As per EPF rules, withdrawing of EPF money at the time of switching jobs is illegal. You can
withdraw only and only if you have not joined any other company within two months of quitting
the job. You can transfer your EPF money once you get a new job.

Q. Can I contribute more than 12%

towards EPF?
As per EPF Act, 1952, the minimum contribution of employee towards EPF account should be at
least 12% but one can contribute up to 100% of your salary plus DA. This extra contribution from
employee does is called VPF (Voluntarily Provident Fund) but remember this does not bound
employer to contribute more. Employer can continue to contribute up to statutory limit of 12%.

However, many employers do not allow extra contribution of employee towards EPF. So you have
to file an application with the Regional Provident Fund Commissioner.

You can download the format of application from HERE.

Q. Is there any other benefit of EPF?

One more benefit of EPF account holder is that it gives a life insurance cover of Rs.60,000. This
comes from the Employees Deposit Linked Insurance Scheme and for this employers have to
contribute 0.50% of your monthly basic pay as premium for your life cover.
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But companies that already provide life insurance benefits or group insurance policy to employees
are exempted from contributing to this scheme.

Q. How to make any grievance of

EPF?
Employees, who have failed to transfer their EPF balances when they switch jobs, or have applied
for a transfer and have not got it, can use the EPF grievance system.

The easiest way to file a grievance is to do it online by visiting http://epfigms.gov.in/ portal.

To register a grievance, the complainant needs to click on the tab Register Grievance. This tab
opens a form that needs to be filled by the complainant, who has to select the category under which
the complaint falls and describe the issue. Supporting documents can be uploaded to clarify the
complaint.

Once the complaint form is filled by the applicant and submitted online, the complainant is allotted
a unique registration number to track the status of his complaint. The complaint is scrutinized and
if it is found valid, the same is forwarded to the relevant party for resolution.

Complaint tracking Complaint status can be tracked online and reminders can be sent using the
registration number.

The other way to file grievance is to locate the regional office

via http://search.epfoservices.org:81/locate_office/office_location.php?id=sm1_innerPage and
drop the grievance by visiting the office

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